Steve Parks

As you'll have seen from my liveblog of the event earlier today I've been in London at the launch event of Enterprise Week.

I'm now on the train on the way home and have noticed a trend to the information reaching my eyes and ears...

1. The freesheet newspaper headlines are on the lines of '1 in 12 Londoners face axe' and similar.

2. I'm in the restaurant car having dinner on the way home, and you always overhear business conversations. This is the first time I've overheard:
a) discussion of reading through the longlist for redundancies.
b) how critical it is to get someone senior onto [Company X] to pressure them to pay because 'we've got our creditors too and its proving quite difficult and embarrassing'

3. Next I browse the BBC News website to catch up on the day and I end up reading about even more redundancies, at Citigroup in particular.

Something really serious and very worrying is emerging here. This is going to be a long, hard recession.

If you're not yet prepared for this in your business, with a plan for surviving a big drop in sales that will last 2 years, then believe me - you must get a plan together right now.

Gordon Brown has taken to the stage now. He says now is the time we need entrepreneurs more than ever, as 'the only people who can create value in the current economy'. He says... The opportunities for enteprise are now endless because the market is now global. While this is a difficult time, we can work with the international community for common ends..... This is the first financial crisis of the global age, and it's highlighted that we are a global economy now and need to collaborate with our international partners. But if we can solve them together we can build a better society and the opportunities for entrepreneurs will be greater than ever before.... "My father always said that everyone has a talent, and everyone should be challenged to use that talent." He's also just told a story to try to engage the younger part of the audience. Apparantly he was sat next to Nelson Mandela at his birthday concert in London, and had to keep explaining who each of the acts were (who had explained it to him?). He says he had difficulty when it came to Amy Winehouse to explain all the elements of why she was famous - especially as Amy apparantly said backstage that her husband and Mandela had a lot in common. And during the rendition of 'free nelson mandela' she sang 'free blakey-my-husband'! There's not a lot of substance in this speech - no policy - but it's interesting, and he has the attention of the audience. He's certainly become a much better speaker than he used to be. No script, just some scribbled notes. A few jokes, a few inspiring stories. He seemed relaxed, and the speech went down well.

Next up on stage are 3 entrepreneurs: Sophie - founder of Divine Chocolate. Tim Smit - founder of Eden Project. James Caan - from Dragon's Den. They were talking about the value of social enterprise.

I've just facilitated a debate in this afternoon's event to launch Enterprise Week. Following the opening speech from Business Minister Lord Mandelson, and the dcomment from Richard Lambert and Peter Jones, we then debated some of the ideas. What came out is that entrepreneurship frees up people's creativity, gives teams of people purpose, brings value to local communities as well as the national economy - and that entrepreneurs now earn the respect of others. In conclusion entrepreneurship is pretty much all that will change the world.

Peter Jones of Dragon's Den fame, and Richard Lambert of the CBI are now on stage at the launch event of Enterprise Week. Peter is talking a little about his enterprise acadamies. Both are saying that the current economic situation is going to give a long difficult period for entrepreneurs, but that like every previous recession it will also present great opportunities for entrepreneurs if approached with the right attitude. Peter says he believes the important things to do are to focus on cash, and on 'cash' sales - ie selling to individuals. In the last recession he said it was people who got into direct selling via phone or mail order that succeeded. This time he says the way to go is to use the power of the internet - keeping costs low, and getting direct to a global market. Unfortunately I didn't get the opportunity to put it to Richard that it's the CBI members that are making the situation so bad.. Massive redundancies, extensions of already long payment terms to small suppliers, withdrawal of finance, bad corporate governance and so on.

I'm heading to London in the morning to take part in a debate at the start of Enterprise Week.

The theme of the debate is "In the current economic climate, can entrepreneurs change the world?"

Details can be found at:
http://www.enterpriseweek.org.uk/get_involved_in/the_debate

Without doubt the challenges for entrepreneurs are intense at the moment - but the opportunities are still there, and those that get their business quickly in the right shape and doing the right (focused) things will come out the other end stronger and more successful.

I've been doing a series of posts on what it takes to achieve this, and in this one I'm looking at the concept of Lean Startups.

'Lean' was developed by Toyota as a way of massively improving their business, and its since been successfully applied in many industries.

So how can you apply the ideas in startups?

Here's a collection of articles you need to read!
http://startuplessonslearned.blogspot.com/2008/09/lean-startup.html
http://venturehacks.com/articles/lean-startups

Here's a slideshow of a presentation on the subject:

And here's an audio podcast of a speech on the subject:

A lot of food for thought here. What are the key ideas you pick up from it all?

In these trying times I've decided the best thing to do is to try and laugh about it - so my latest venture is a satirical news website for the UK.

Take a browse at www.news42.co.uk, and (although its only in live testing yet, so there aren't many articles) please do tell your friends and colleagues about it.

It's designed to poke fun and bring a wry smile rather than to make money. Some things you just have to do because you want to!

I'm browsing the business book section in Borders - and look what I found! That's one way of approaching the subject I suppose - but I guess it's best not to leave it lying around on your desk.

Since writing my last post about the Obama campaign, I've just come across a great quote from his new chief-of-staff, Rahm Emanuel:

"You don't ever want a crisis to go to waste; it's an opportunity to do important things that you would otherwise avoid. In 1974 and 1978 we never dealt with it, and our dependence on foreign oil never changed."

I love this quote.

In a crisis, like the current economic problems that are probably impacting your company in some way, the first priority is survival - but it is then a real opportunity to make changes that you would never get round to making, or couldn't get away with making, in the good times.

Everyone knows times are tight, so maybe now is the time to really cut back on waste of time, money and resources. Maybe it's time to implement a tougher credit application and credit control procedure and attitude. Maybe it's time to become a firmer manager (but still fair). Maybe it's time to demand more from your suppliers (in return for being a great customer) - or shop around for new suppliers.

Maybe it's even time to change what you do or how you do it?

Or what's the equivalent for your business of the foreign oil that the USA is so reliant on? Who outside the business is able to put a squeeze on you? Make a change, and make it now.

What would you really like to change about your business but have never got round to?

Use the current impetus you have to solve problems to make these changes too.

Don't let a crisis go to waste.

Whatever your political persuasions I think everybody is to some extent impressed by the way Barack Obama organised his campaign, and how he is now organising the transition.

I should say upfront that I'm a great fan, but I do believe that we can all learn a lot of lessons from him and his team.

He is about to become Chief Executive of USA plc - and by anyone's assessment this is a turnaround of a failing organisation. So how is going about this?

1. In his campaign he was very clear about the scale of the problem, and very open that he did not have a magic answer. Any solution would be difficult, and would require sacrifices and hard work he said.

2. Despite the depths of the problems, he campaigned on a very aspirational message - 'Yes We Can'. I loved the simplicity of this, and the emphasis on 'We' rather than 'I' - so many politicians' campaigns are about how 'I' will do this etc.

3. He didn't work himself into the ground. So many people in campaigns like that, or in management of crises, work around the clock and get more and more exhausted - reducing their effectiveness. He took time for his family, to go to the gym, to visit his sick grandmother and more. He had a rule that he didn't work on his many plane trips - he'd use the time to read widely, taking in new ideas, and to think. You reduce your effectiveness dramatically when you allow yourself to get too tired, so everything starts to take longer and you make mistakes. Make time to relax and keep fit, it's extremely important. You can't fix the organisation if you're also breaking down!

4. He built clearly defined teams, with clear onjectives. During his campaign he even had a team specifically preparing for what to do once he'd won! As a result, the day after he won he launched a website at www.change.gov to set out his agenda in detail and invite ideas from the public. It's fascinating browsing that site.

5. He's been very open about the whole process. You can find photos on flickr, videos on YouTube, lots of details on his website at www.barackobama.com, and on the new www.change.gov website. People are fascinated by it, and reassured by the openness. It signals a real change.

6. He emphasises that everyone needs to do their bit. His websites actually set out what that can be.

7. He mobilised millions of people to get behind the change in small ways, rather than just focusing on the people around him who could do a lot. He had more volunteers than any other campaign, more donors than any other candidate in history.

8. He used the power of public speaking to inspire people. He wasn't embarrased to set out to inspire - something many people are very hesitant about.

9. He's focusing his, and everyone else's, attention on the main problem. He had big plans for healthcare and education - but he has made it clear that his original ambitions have to wait until the economic problems are fixed - that is priority number 1. Every failing organisation has one or two key things that are the big main problems. You can't do everything well at the same time, so just focus on those.

I'm going to watch Obama's presidency with interest, and try to learn.

What do you think? Have you learned anything from President-Elect Obama?

I heard an old saying that I knew, but had forgotten, earlier today:

If you chase two rabbits, both will get away

I'm guiltier than most of always launching off a new idea or project, and spreading my time and attention too thinly over many things.

Particularly in the current climate, it's focus that will get results.

For the last couple of weeks we've been working on a major relaunch of the FlyingStartups online community I run for entrepreneurs.

The website supports my books for entrepreneurs, and allows members (it's free to join) to share ideas, experiences and advice.

Entrepreneurs keep a regular diary of their progress in starting their businesses - and those make fascinating reading.

I first launched it back in 2003, so it's great to see the community still going strong.

Visit the site at: www.flyingstartups.com

I'm pleased to announce the first of a new series of FlyingStartups training workshops.

Beat the Crunch is a day-long session in which I, and professional trainers, will examine how to get yourself and your business in the right state to survive and even thrive in these difficult times.

We'll draw on advice from entrepreneurs who have been in tough situations before, the ideas in my books, and the shared experiences of the delegates.

The workshop is in central London on Saturday 22nd November 2008 with a special offer for those who book before the end of October. Book your place now! I'll look forward to meeting you.

Find out more details here.

The Silicon Valley blogs have been buzzing over the last few days with details of a number of presentations and letters to hi-tech companies by their venture capital backers. These presentations were designed to inform CEOs about the outlook for the economy, and share the experiences and advice of the investors - all with the intention of helping their companies survive.

I'm going to summarise them here, because they give a very interesting and insightful perspective - and some great advice.

Sequioa

Sequia Capital is possibly Silicon Valley's most respected venture capital firm. They've backed many of the web's best-known companies from their first steps.

Last week they held a meeting for the CEOs of their investee companies - with the intention of delivering a short sharp shock.

Here are the slides from the presentation:

The analysis in here is fantastic - and well worth studying in depth. But the key messages are:

1. This is not a short term problem. Prepare for tough years rather than months. Don't expect bumper good times to return for 15 years.
2. You need to make sure your company is cashflow positive.
3. You need to cut costs (but smartly - my addition), reviewing salaries, using commissions and other performance incentives - and using zero based budgeting (more in a later post on this).
4. Focus on only the genuinely valuable and likely sales in your pipeline, get rid of the noise.
5. Spend every dollar as if it were your last.

Benchmark Capital

This VC firm has lots of similar advice, but it was particularly interesting to read them quoting a CEO they know who went through the dotcom crash...

Recently, I spoke with an entrepreneur who as a CEO during the dot‐com crash and oversaw a headcount reduction from 130 to 28 (through two major layoffs), and eventually back to profitability and an IPO. If you think a 10% layoff is tough, imagine laying‐off 78% of your employees. It is one of the hardest things I have ever seen anyone do. I recently asked him how that experience has shaped the way he ould advise people on running a startup. He had a list at the tip of his tongue (included now):

1. You don’t realize how fast things spin out of control. There are self‐reinforcing negative affects in a downturn.
2. Don’t spend money until you have to
a. Don’t move out of your office until you are sitting on top of one another
b. Don’t hire any incremental employee until you just can’t stand it
c. Don’t get more capacity in your data center until your site is going down
3. Better to be “late to the party” than to be early and run out of money
4. Line item review of the budget every month (legal, accounting, everything)
5. Not just a CEO mindset, but a company mindset
a. Everyone must buy into the process
b. But in a calm way - not run for the hills
6. Create 2 or 3 different burn scenarios - know at any point in time how many months of cash is left.

Ron Conway

And finally, angel investor Ron Conway sent these emails to the companies he has stakes in.

In summary

All three of these experienced investors give similar advice - essentially:
1. Cut costs wisely
2. Plan for this lasting a long time
3. Don't expect to be able to raise outside funding
4. Watch the cash flow like a hawk!
5. Act quickly

I'll be writing more blog posts soon about the economic situation and what it means for entrepreneurs in terms of threats - and opportunities.

The gravity of the economic crisis will not have escaped you. You're probably well aware that there is no quick fix and we're in for a long hard couple of years.

But this doesn't mean entrepreneurs should despair, panic or get out of the game. Imagine if lots of pipes burst creating a big flood - and all the plumbers decided to give up?

It's entrepreneurs that the world is relying on to get out there, run their businesses, employ people, create real value and fix the global economy.

The small-minded managers in big businesses are going to get it all wrong. That's guaranteed. They'll cut spend on marketing, training, product development and quality. They'll run big voluntary redundancy schemes in which the best people will choose to leave because they are the ones that can see opportunities elsewhere - so the big companies will be left with the poorest performers. They will drive cost down, with a short term benefit, but a huge long term price to pay - as well as further impacting the current economic crisis. And they'll have a big payoff waiting for them if they mess up and get booted out.

So we're all relying on you - the big thinking managers in small businesses. You're the ones that actually make things, do things, and serve people.

Entrepreneurs do need to respond to the current situation, ensuring the survival of their businesses - but then they need to be quick to respond to the opportunities that present themselves in any adverse situation.

This will be the time to hire great talent at affordable rates. This will be the time to get great deals from suppliers, and on new equipment. This will be the time to get ahead of your competitors.

Over my next few blog posts I'm going to be looking at the different aspects of the threats and opportunities, what it takes to ensure a business survives - and how to find the new opportunities.

In the meantime here's a summary from the BBC of the events that led to this economic crisis.

I have spent today as a guest of RBS Invoice Finance (thanks guys!) at the Palmer Sport corporate driving event at Bedford Autodrome. There's been some networking - but most time has been spent on the track in one of 9 performance cars - including the Jaguar XKR pictured above, which I absolutely loved. I'm not the most sporty or competitive person in the world, and I'm not a petrolhead - but I managed some very respectable lap times, and overtook quite a few of my fellow drivers much to the approval of my instructor. In the Jaguar XKR my best lap time put me 13th out of 85 people there on the day.

The last few months have been extremely busy - so the blog has suffered.

We've just added a feature to this site that allows me to submit blog
posts from my PDA wherever I am, so I'll be blogging more regularly, and
also from wherever I am on the move rather than waiting 'til I get back
and finding the time!

I've been catching up on my blog reading over the weekend and here are a couple of articles I found interesting that I wanted to share:  read more »

The New Yorker: The Permission Problem

Seth Godin has a good blog post on the virtue of patience for entrepreneurs.

He's aiming it mainly at web startups - but I think it's true for anyone starting a business or launching a product - and I've mentioned it in my books many times.  read more »